A Future Generation portfolio is an original approach developed by Valerie Gardner, Nucleation’s Managing Partner, for use by Tiemann Investment Advisors, LLC (TIA) for managing an index-style portfolio of public equities. The design enables an investor to divest their ExxonMobil, Chevron and any other fossil fuel-related company that they hold (or avoid buying any fossil fuel equities, if they are creating a new portfolio) but nevertheless fill the Energy Sector of their portfolio with an appropriately-sized allocation of forward-looking, zero-carbon energy equities.
In 2002, well before launching Nucleation Capital, Ms. Gardner co-founded TIA, a registered investment advisory firm based in Menlo Park, which provides custom portfolio designs and management for high net worth clients. Each portfolio of individual stocks and bonds derives from individual investment choices made by the clients as to their risk preferences and asset allocations according to a number of standard factors: debt. vs. equity, domestic vs. international, large cap vs. small cap, value vs. growth, etc. With the introduction of TIA’s Future Generation strategy, TIA clients are also able to elect to factor in “clean energy” vs. “dirty energy.”
TIA recognized back in 2011, that looming out there was a growing “carbon-pricing” risk. That the practice of externalizing carbon dioxide emissions would eventually be the cause of reduced enterprise value, whether it was caused by the passage of a price on carbon or as a result of shareholder pressure and/or reporting obligations relating to carbon risk.
On behalf of TIA, Valerie spent a number of years researching and investigating the sources of carbon-free energy and created a filter that had a negative screen for fossil fuel-related companies and a positive screen for companies providing sources of carbon-free energy. While rather intuitive, it turns out that most ESG or Impact funds are not managed as index funds, so they do not attempt to replicate the S&P with their equity allocations. As a result, almost none of the funds that have supposedly “divested fossil fuels” actually hold any clean energy investments. Some, in fact, actually hold natural gas.
It will come as no surprise to those who are familiar with Nucleation Capital, that what makes the TIA Future Generations portfolio unique is in its recognition that nuclear energy provides critical carbon-free power and in careful analysis and selection of a subset of nuclear energy-related companies to include in the energy sector.
TIA’s Future Generations™ strategy continues to be available through TIA for investors who hold or would like to hold diversified, separately-managed portfolios but who want to invest, as much as possible, in the future of clean energy. To learn more about how you can “clean up” the energy in your portfolio, please contact us and we will put you in touch with Tiemann Investment Advisors.